Happy New Year! With the holidays now behind us, we send our best wishes for a healthy, productive and prosperous 2012! As expected, 2011 was a roller coaster year for financial markets around the world. The volatility that began over the summer continued through November with stocks finally enjoying a “Santa Claus” rally to finish the year flat.
The European Debt Crisis remains at the forefront of Pacific Wealth Management’s radar screens for 2012. We are concerned the entire Eurozone may experience a financial crisis similar to the Lehman Brothers bankruptcy-induced banking crisis of 2008. The essential question is whether the debt problems and upcoming recession in Europe will torpedo a very tepid and tenuous U.S. economic recovery.
The U.S. financial markets have picked up some strength over the last couple of months. Unfortunately, Corporate CEO’s remain reluctant to spend their very large caches of cash on future growth until they see more clarity on taxes and the economic outlook. Our elected politicians in Washington continue to inspire little confidence. The upcoming presidential election will add more drama to what is likely to be a very dramatic 2012.
Despite recent stock market strength, we expect European solvency issues to reemerge as we head further into the New Year. The instability in Europe is likely to precipitate more volatility in the global financial markets. Strategically, Pacific Wealth Management portfolios remain conservatively invested. Our consistent long term focus is on wealth preservation.